What does it mean when charges in the GFE have a 10% tolerance?

When charges in the Good Faith Estimate (GFE) have a 10% tolerance, it signifies that the final costs may vary from the amounts quoted on the GFE but cannot exceed the GFE figures by more than 10%. This tolerance is designed to provide borrowers with some predictability regarding their closing costs while still allowing a reasonable degree of variability based on actual expenses incurred during the loan process. Thus, if the charges listed in the GFE are within 10% of the estimated amount, they are considered acceptable to the borrower without requiring further approval or adjustments. This helps to balance borrower protection against the realities of fluctuating costs that may arise during the mortgage process.